Adaro’s business is vertically integrated from pit to port to power, and there are many risks that all management levels across the group need to manage in a structured and consistent manner to achieve our business objectives and create shareholder value.
We have defined 30 risk types to help business units identify, assess and mitigate risk events in a more structured manner. Three lines of defense give us a high level of control over these risks, as described below:
These activities performed by each line of defense combine to give greater assurance to the Board of Commissioners and Board of Directors that Adaro’s risk management and internal control systems are working to meet obstacles to achieving strategic objectives.
By the end of 2015, we already have 50 Risk Champions assigned by various business units who are responsible for promoting and implementing risk management in their respective organizations. Each unit and Adaro’s corporate functions have at least two risk champions. New risk champions are trained annually in basic knowledge, principles and processes of risk management.
It then becomes their responsibility to ensure that key risks and mitigation plans are discussed in monthly meetings, conduct risk assessments, to compile risk reports, align risk profiles with the five-year/one-year plan and budget and to ensure continuous improvement.